Mumbai

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SWIFT business forum

• Mumbai
• 27-28 September 2005

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How SWIFTSolutions for payments and securities
can improve your bottom-line
Mumbai, 27-28 September 2005
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SWIFT business forum in IndiaTodays agenda
1400 - 1530 How SWIFTSolutions for payments
and securities can improve your bottom
line Introduction David Pryce SWIFTSolutions
for the banking industry Charles Legrand Avi
Ghosh SWIFTSolutions for the securities industry
John Falk
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Biggest threats to bank profitability

• (6) Too much regulation
• (2) Credit risk
• (8) Corporate governance
• (1) Derivatives
• (15) Hedge funds
• (11) Fraud
• (18) Currencies
• (12) High dependence on technology
• (16) Risk management techniques
• (3) Macro-economic trends

Sources CSPI, PricewaterhouseCoopers
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SWIFTNet - Single window access to the financial
world
Market infrastructures
SWIFTNet FIN
Enabling the community
Single windowaccess to MIs
SWIFTSolutions
Serving you to serve your customer
SWIFTNet
Extendedclient reach
Harnessing business process modelling
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SWIFTSolutions packaging of SWIFT components to
meet your business needs
Structured standards SWIFT or others
Standards
SWIFTNet in a SWIFT managed CUG
Mandatory
SWIFTNet
Industry agreed market practice and RL, with SLAs
Rules
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SWIFTSolutions
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SWIFTNet now offers a complete and improved set
of capabilities
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SWIFTNet messaging services
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You can get more value from FIN
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Many customers already complement FIN with
InterAct, FileAct, and Browse
Live and pilot traffic
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InterAct, FileAct, and Browse already complement
FIN in a wide range of areas
One single SWIFTNet infrastructure
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SWIFTSolutions for the banking industry

• Avi Ghosh
• Manager
• India and Indian Sub-Continent
• SWIFT

Mumbai, 27-28 September 2005
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Payments
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Payments
Cash Reporting
Exceptions Investigations
Bulk Payments
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How has the payment world transformed itself?
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What is SWIFTNet Cash Reporting?
FIN MT 103 / MT 202
Intraday FIN MT 900/910/942
SWIFTNet Cash Reporting
NEW!
Account servicing institution
Account owner
End of day FIN MT 950
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SWIFTNet Cash Reporting responds to your
real-time reporting needs
Market infrastructure cash management
Real-time account information
Real-time cash reporting for corporates
SWIFTStandards XML
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From reporting to reconciliation and more
Your Bank
US Bank
1. Request for USD Payment
Cash Reporting
2. Real-time balance information
2b. Balance to rec
3. Request for USD Payment
4. Real-time balance information
4b. Balance to rec
5. Get transaction
6. Return transaction
6b. Details to rec
7. Investigation process
Q405 Pilot
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SWIFTNet Cash Reporting features and benefits

• Features
• SWIFT trusted third party providing the SWIFTNet
  infrastructure
• Reach all players involved in the end-to-end
  transaction chain
• Use on both domestic and cross-border levels
• SWIFTStandards that are used globally
• Use of common security scheme
• Re-usage of SWIFTNet infrastructure

• Benefits
• Optimised balances
• Earlier exception handling
• Shorter reconciliation cycles
• Improved risk management
• Improved customer service
• Back office application integration
• Global reach
• End-to-end standardisation
• Wealth of information in the XML
• Tracking of status of the cash

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SWIFTNet real-time account information
membership status Service Providers
August 2005

• Español de Credito (Banesto) (ES)
• FirstRand Bank Limited (ZA)
• Fortis Bank (BE)
• HSBC (worldwide implementation 42 locations)
• HVB Bank Czech Republic A.S. (CZ)
• Industrial Commercial Bank of China (CN)
• ING (BE)
• La Caixa (ES)
• Mizuho Corporate Bank (JP)
• National Australia Group (AU)
• Royal Bank of Canada (CA)
• RZB (AT)
• San Paolo IMI (IT)
• Santander Central Hispano (ES)
• SEB (SE)
• Société Générale (FR)
• Société Marseilleise de credit (FR)
• Standard Bank of South Africa (ZA)
• Unicredito Italiano (IT)

ABN Amro (GB) ABSA Bank (ZA) Banca Intesa
(IT/FR) Bancaja (ES) Banco Comercial Portugues
(PT) Banco Cooperativo Español (ES) Banco
Popular Español (ES) Banque Nationale de Belgique
(BE) Bank Austria Creditanstalt (AT) Bankinter
(ES) Bank of America (BE/CA/CH/DE/ES/FR/GB/GR/IE/
IT/NL/US) Bank of China (CN) Bangkok Bank (TH)
Caixa Geral de deposito (PT) Citibank
(US) Credit Agricole (FR) Deutsche Bank
(DE/US) Dresdner Bank (DE)
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SWIFTNet real-time account information
membership status Service Users
August 2005

• Caisse Nationale des Caisses d Epargne et de
  Prevoyance (FR)
• Caixa Geral de deposito (PT)
• Citibank (US)
• Commerzbank (DE)
• Credit Agricole (FR)
• Deutsche Bank (DE/US)
• Español de Credito (Banesto) (ES)
• FirstRand Bank Limited (ZA)
• Fortis Bank (BE)
• Fortis Bank (HK)
• Guyang Commercial bank (CN)
• HSBC (worldwide implementation)
• Hua Xia (CN)
• HVB Bank Czech Republic A.S. (CZ)
• Industrial and Commercial Bank of China (CN)
• ING (BE)
• KB Luxembourg (LU)
• La Caixa (ES)
• National Australia Group (AU)

• ABN AMRO (GB)
• ABSA Bank (ZA)
• Banca Intesa (IT/FR)
• Bancaja (ES)
• Banco Comercial Portugues (PT)
• Banco Cooperativo Español (ES)
• Banco Financiero de inversion (ES)
• Banco Pastor (ES)
• Banco Popular Español (ES)
• Bank Austria Creditanstalt (AT)
• Bankinter (ES)
• Bank of America(BE/CA/CH/DE/ES/FR/GB/GR/IE/IT/NL/
  US)
• Bank of China (CN)
• Bank of Western Australia (AU)
• Banque de Luxembourg (LU)
• Banque Européenne dinvestissement (LU)
• Banque Nationale de Belgique (BE)
• BBVA (ES)
• Caisse Centrale Desjardins (CA)

Rizal Commercial Bank Corporation (PH) RZB
(AT) San Paolo Bank (LU) San Paolo IMI
(IT) Santander Central Hispano (ES) SEB
(SE) Société Générale (FR) Société Marseilleise
de credit (FR) Standard Bank of South Africa
(ZA) Unicredito Italiano (IT) Westpac (AU)
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How do I implement SWIFTNet Cash Reporting?

• Joining the service is for free
• Sign the Subscription Form
• You only pay standard InterAct traffic fees
• Traffic aggregated towards your Global Tier
  calculation!
• Verify your XML enablement
• Check status of your counterparts

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SWIFTNet Exceptions Investigations An
opportunity not to be missed
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SWIFTNet Exceptions and Investigations
Settlement
PaymentProcessing
Paymentinitiation
Reconciliation
Investigations
Exceptions
Request To Cancel Payment Request To Modify
Payment
Claim Non Receipt Unable to Apply
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Industry business case

• Enhanced customer service
• Automated responses to inquiries quick hits
• Faster and more accurate resolution of liability
  cases
• Staff concentration on tasks requiring expertise
  to improve cash management service
• Lower costs
• Reduced backlog
• Reduce financial risks reputation, principal
  write-offs, inter-bank compensation
• Reduce messaging costs

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How SWIFTSolutionsfor Bulk Payments can
improveyour bottom line
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Bulk payments

• Usually low to medium value and/ornon-urgent
  payments
• Credit transfers salaries, pension
  payments,retail and commercial payments
• Direct debits
• Cheque clearing and truncation
• Electronic files
• Country-specific formats
• File-based correspondent relationships and
  Automated Clearing Houses

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FileAct supports your bulk payments needs
Domestic ACHs and Regional ACHs
Correspondent banking
Corporate and financial institution customers
Supporting existing formats
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SWIFTNet Bulk Payments expands the options for
financial institutions and service providers
Financialinstitution (FI)
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SWIFT Partners provide interface integration
solutions for SWIFTNet FileAct
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Corporate connectivity
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Streamlining with heterogeneous systemsis a
challenge
Corporate client
Accounts payable
host to host X
Leased line
Accounts receivable
e-banking Y
Treasury
Other
e-banking Z
PSTN
fax-banking
How can banks help ?
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Banks can help by offering access over a secure
standardised channel
Corporate client
Accounts payable
Accounts receivable
Treasury
SWIFTNet interface
Other

• One platform
• Full STP
• Highest level of security and resiliency

• Lower costs
• Reduced risk
• Improved control

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Member Administered closed user groups MA-CUGs
Corporate client
SWIFT user
SWIFT user
Serving your customers on SWIFT
Corporate client
SWIFT member
Corporate client
SWIFT user
Market infrastructure
Corporate client
SWIFT user
SWIFT user
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Provide true end-to-end real-time information to
customers
SWIFTNet
SWIFTNet
XML
Corporate customer
Account servicing institution
Cash reporting messages containing information
(balances/transactions) re corporates account
MA-CUG
End to end with SWIFTNet Cash Reporting
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SWIFT business forum

• Mumbai
• 27-28 September 2005

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Trade Services Utility
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The trade market continues to shift
Less bank involvement, Greater corporate
risk, Lower bank margins
Documentary credits
Open account simple payment
Risk
() Corporate risk spectrum (-)
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An estimated 81 of global trade is now open
account ...
Other 3
Collections 5
L/Cs 11
Open Account 81
Source Global Business Intelligence Corp report
commissioned by Misys
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and traditional trade instruments are growing
slower than world trade

bn
of global trade in L/Cs
Value of Global trade (bn)
Source Celent Communications
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Major trade banks strategies driven by
intermediation into supply chain activities
Purchase Order
Buyer
Seller
Payment
Financing
Payables (A/P)
Purchase Materials
Dispute Resolution
Manufacture Packaging
Information management
Receiving Customs
Shipping
Document Presentment
Letter of Credit
Collections (A/R)
Purchase Order
Negotiate Terms
Payment
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SWIFTs strategy in supply chain management
Expand SWIFTs focus from traditional trade
instruments to supporting bank services across
the entire corporate supply chain

• SWIFTs two-part tactical approach
• Maintain the current FIN category 4 and 7 message
  types
• Develop a central Trade Services Utility (TSU) to
  enable banks to provide new and enhanced services
  in the corporate supply chain area

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SWIFT offering in supply chain management
Collections (Cat 4)
Guarantees (Cat 7)
Letters of credit (Cat 7)
Buyers bank
Sellers bank
SWIFTNet Trade Services Utility
SWIFTNet Trade Services Utility
TSU
MT-based
MX-based
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The SWIFTNet Trade Services Utility
Trade Services Utility
Database
Central data matching
Trade facilitators
a SWIFT service using SWIFTNet FileAct and XML
messages to access a central data matching and
work flow engine. It supports bank services in
the corporate supply chain.
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SWIFT business forum

• Mumbai
• 27-28 September 2005

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SWIFT Solutions for the Securities Markets
SWIFT Strategic Financial Forum, Mumbai 2005

• John Falk
• Securities Market Infrastructures
• SWIFT

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Agenda
SWIFT and Securities
SWIFT Solutions for Securities




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The ECO-system in securities
Corporate Issuer
InformationProvider
Invest. Adviser
StockExchange

Investment manager
Broker-Dealer
VMU ETC Provider
Gl. Custodian
Gl. Clearer
ICSD
CCP
CSD
Local Custodian
Local Clearer
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The Securities industry and SWIFTSecurities
messaging 1997- 2005
Millions of FIN CAT5 messages
Growth 12
Growth 18
737
700
657
Growth 24
Growth 15 YTD
600
555
Growth 28
554
500
Growth 55
447
400
348
Growth 50
300
Growth 39
200
224
150
100
108
0
Aug
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source TIW Aug 2005 YTD traffic
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SWIFT messages by market (August 2005 YTD)
In 1992 Securities traffic represented 3 of
SWIFT messages
Breakdown
Over 4,000 Securities users 320 Broker
Dealers 280 Asset Managers (80 of Top 100)
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SWIFTNet Solutions
SWIFTNet FIX
SWIFTNet Funds
Asset Servicing
SWIFTNet Corporate Actions
SWIFTNet Data Distribution
SWIFTNet Proxy Voting
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Securities Strategic PrioritiesSWIFT Solutions
Market Space
Strategic Priorities
Equity and fixed income
Be the messaging platform of choice for market
infra-structures
Succeed in Pre trade /Trade messaging
Pre-trade / Trade
Maintain leading position in Standards
SWIFTNet FIX
ISO 20022 Potentially all SWIFTNet Securities
Business Solutions
ISO 20022 Potentially all SWIFTNet Securities
Business Solutions
Platform of choice for Post-trade / Pre-set.
Post Trade /Pre-settlement
SWIFTNet FIX / ISO 15022 FIN
Grow traffic in Clearing and Settlement and
Custody services
Clearing and Settlement
ISO 15022 FIN Data Distribution SWIFTNet
Corporate Actions
Custody Services
Become messaging platform of choice for Funds
industry
Investment funds
SWIFTNet Funds / ISO 15022 FIN
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SWIFTNet FIX
Filename_Vx.ppt
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SWIFTNet FIX Full lifecycle of a trade is now
on SWIFT
VMUs
FIX Trading - IOIs and execution
Settlement instruction
Payments
Settlement confirmation
Collateral lending borrowing
Reporting
CorporateActions
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Securities market spaces
Corporate issuers
Stockexchanges
Investmentadvisors
Informationproviders
Investmentmanagers
Broker-dealers

ETC serviceproviders
Globalcustodians
Globalclearers
ICSDs
Clearers
Custodians
Local
SWIFTNetFIX clients
CSDs
SWIFT clients
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SWIFTNetFIX service

• SWIFTNet FIX service enables electronic trading
• Re-uses existing SWIFT infra-structure
• First global network and FIX Hub combination
• Industry leading operational and support
  infra-structure
• Intelligent FIX Hub ensures message continuity

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FIX Connectivity Options
Leased Lines
BUY Side
SELL Sides
FIX session
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Accessing SWIFTNet FIX Service
SWIFT
FIXConnector
FIX Engine
OMS
SWIFT Alliance Gateway
FIXConnector
FIX Engine
OMS
SWIFTAlliance WebStation
Subscriber Administration GUI
OMS Order Management System
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SWIFTNet FIX Hub serviceArchitecture
Buy Side Subscriber
Sell Side Subscriber
SWIFT OPC
SWIFTNet Switch
Order Management System
Order Management System
FIX Hub
FIX format
FIX format
FIX engine
FIX engine
FIX Engine
FIX Protocol
FIX Protocol
FIXConnector
FIXConnector
FIXConnector
InterAct
InterAct
SIPN
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Advantages of SWIFTNet FIX

• Reduce costs of FIX operations
• Access trading partners in 200 countries
• Single secure and resilient connection for the
  full transaction life cycle
• Benefit from certified trading partners
• SWIFT longevity, support, pricing

Slide 61
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SWIFTNet Funds
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SWIFTNet Funds your standard messaging backbone
for domestic cross-border flows
Concentrators
Transfer Agent
Portfolio manager
Investor
Distributors
Fund Company
Fund accountant
Cash Agents
Fund custodian/trustee
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How to reach the same level of STP for funds as
for securities payments in a cost-efficient way
STP benefits
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Standards, market practice business practice
harmonization around ISO 20022
Canada FundServ
US DTCC ICI
Germany SWIFT user group
UK Standards WG
Switzerland NMPG WG
France SWIFT user group
swimEC Australia
Industry groups Singapore, Hong-Kong Taiwan
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SWIFTNet Funds Messaging Service Added Value
70 players get ready to reap the benefits

• Added Value Messaging features
• Centrally managed message delivery
• Central validation of standards quality
• Neutral audit trail of message sending
• Security, Availability, Resilience

Transfer Agent
Concentrators
Fund
Fund accountant
Distributors
2005 40 users
2005 43 users
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SWIFTNet FundsPartners readiness (Status Sept
1st, 2005)
Business application

• Scénario I.C. Cogit Portfolio, OMSTrade Free,
  Starcust
• SDS GEOS
• Sungard IMS ePI InvestOne,V3, GP3, STep
• Vermeg Omega FA PM, Megara

• ABProdata Babel Integrator
• Axway Axway for SWIFTNet
• Bottomline t. Webseries ifp
• CAD Easyset II
• CheckFree Tradeflow
• Fin. Tradeware S-Messenger
• Swissrisk X-Gen
• IBM WBI family
• Incentage Incentage middlew.
• Microsoft BizTalk Accelerator for
• SNFunds

• Misys Misys message Manager
• NCH Gari Gold Edition
• Seebeyond ICAN
• Sungard SBI MINT
• Smartstream TLM-PA
• Sterci Steform
• TietoEnator Pro Switch
• Topcall EOPA for funds
• Trace Financial Transformer
• WebMethods SWIFT STP Sol.

SWIFTNet Ready Funds labelled
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The business case to invest in SWIFTNet Funds

• Single window to business needs
• Business chain coverage
• Instrument coverage
• Market coverage (domestic and cross border)
• Cost efficiency
• Messaging cost
• Eased implementation
• Eased maintenance of standards
• Single window to all counterparties
• Secure, reliable and available network
• Cost efficient connectivity solutions

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Asset Servicing
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Asset Servicing
SWIFTNet Corporate Actions
SWIFTNet Data Distribution
SWIFTNet Proxy Voting
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Standardised Corporate Actions Event Types
Voluntary
Mandatory
Mandatory with Choice

• Tender
• Exchange
• Conversions
• Rights
• Warrants
• Subscriptions

• Dividends
• Interest
• Stock Splits
• Mergers
• Name Changes
• Redemption's
• Calls

• Choice dividends

50 Different types
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Statistics

• 3,000 institutions receiving and 1,000
  institutions sending corporate actions messages
  on SWIFT
• In over 130 countries
• Over 35 million corporate actions messages sent
  over SWIFTNet FIN in 2004

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SWIFTNet Data Distribution
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SWIFTNet Data Distribution

• New category Securities Market Data Provider
• Data Providers Stock Exchanges
• Who?
• Interactive Data, Telekurs, and WM
• LSE, TSE and SGX
• DTCC GCA live Sep 2005
• Expect at least 2 more data providers by end 2005

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SWIFTNet Data Distribution

• G30 Global Clearing and Settlement Report A
  Plan of Action 2003
• Recommendation 8 Automate and standardize asset
  servicing processes including corporate actions,
  ..
• Issuers, providers of clearing and settlement
  services and other relevant market participants
  should advise investors of all details of
  corporate events that they require in an
  automated, timely manner
• Recommendation 2 Harmonize messaging standards
  and communication protocols
• All market participants should adopt ISO 15022
  as the global standard for straight-through
  securities messaging across the entire securities
  life cycle.

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SWIFTNet Proxy Voting
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Regulatory Background

• Principle market drivers
• Rising global importance of good corporate
  governance practices and corresponding increase
  in regulatory pressure on compliance with these
  practices
• Mandatory practices in US now, in EU within 3-5
  years
• Compliance is costly due to the manual,
  non-standardised process and proprietary systems
• Need for reliable audit trails

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The Proxy Voting flow

• Meeting notification process
• Distribution of meeting notifications

• Voting Process
• Collection and communication of voting
  registration, instructions cancellations
• Communication of the status of the vote, ie,
  received, position OK, lodged with next
  intermediary

• Finalisation process
• Distribution of AGM/EGM results
• Vote execution confirmation
• Vote disclosures

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Conclusion
Corporate Issuer
InformationProvider
Invest. Adviser
StockExchange

Investment manager
Broker-Dealer
VMU ETC Provider
Gl. Custodian
Gl. Clearer
ICSD
CCP
CSD
Local Custodian
Local Clearer
80
SWIFT business forum

• Mumbai
• 27-28 September 2005

81
SWIFTSolutions
82
SWIFTNet now offers a complete and improved set
of capabilities
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SWIFT business forum

• Mumbai
• 27-28 September 2005